Solar tariffs in India tumble to another new record low

In the 500 MW Bhadla Phase-III Solar Park auction, Acme Solar lodged the winning bid of INR 2.44 ($ 0.037)/kWh to develop 200 MW, while SBG Cleantech quoted INR 2.45 ($ 0.038)/kWh to bag an order for 300 MW.

The new lowest tariff shows a 7% decrease on the previous cheapest price offered in the 250 MW Bhadla Phase-IV Solar Park INR 2.62 ($ 0.0405)/kWh just a week ago.

Overall, 10 developers quoted tariffs below INR 3 ($0.046)/kWh, out of which six quoted a tariff lower than the previous low tariff of INR.2.62 ($0.0405)/kWh, reports Mercom Capital Group.

The project will have a 12-month completion timeframe from the date at which the PPA is signed, and developers will enter 25-year PPAs with Solar Energy Corporation of India (SECI), the off-taker.

“We were expecting prices near INR 2.65 ($0.041)/kWh, similar to the Bhadla Phase-IV 250 MW auction, but developers have surprised us. Within a week, we have successfully put thermal behind solar on price,” stated a SECI official, adding that the competition is getting tougher in the solar sector.

“We did not expected the solar tariff to cross INR2.50 ($0.038)/kWh yet. It is a pleasant surprise and shows that the efforts by the Ministry of New and Renewable Energy (MNRE) are finally showing,” stated an MNRE official, adding that the MNRE has clarified the tender guidelines, made the entire process transparent and formulated policies like payment security mechanisms.

This is the second big record-breaking auction for ACME Solar, which previously won 250 MW in the Rewa auction, touted as a game changer. As the Rewa Solar Park saw tariffs of INR 3.30 ($0.051)/kWh in February, while Bhadla Phase III project in May had the lowest price of INR 2.44 ($0.037), this means that the tariffs sloped downwards in three months by 26%.

SBG Cleantech, a joint venture between Softbank Group, Foxconn Technology and Bharti Enterprises, has also won two big projects at record low tariffs in a short period of time, including a 100 MW project in Bhadla Phase IV park at INR 2.63 ($0.0409)/kWh and a 300 MW project in the Bhadla Phase III park auction at INR 2.45 ($0.038)/kWh with a 7% difference.

“Neither solar insolation nor component prices changed much in two days, but tariffs still fell 7%. The size of the winning project was definitely bigger but all other aspects are the same compared to the Bhadla Phase IV park. It is now down to two things: access to large pool of low cost funds and praying that module and component prices continue to go down rapidly,” said Raj Prabhu CEO and Co-founder of Mercom Capital Group.